Question

Gerry deposits $2000 at the end of every 3-month period in a fund earning interest at j₂=8%. If the fund pays simple interest for the fractional part of any interest period, what is the accumulated value of Gerry's deposits at the end of 5 years? *Do not round intermediate answers*

Answer 1

P = Quarterly deposit = $2,000

n = 5*4 = 20 Quarters

r = Quarterly interest rate = 8% / 4 = 2%

Period	Beginning Balance	Interest (2%)	Investment at the end	Ending Balance
1				2000
2	2000	40	2000	4000
3	4000	80	2000	6000
4	6000	120	2000	8000
5	8000	160	2000	10000
6	10000	200	2000	12000
7	12000	240	2000	14000
8	14000	280	2000	16000
9	16000	320	2000	18000
10	18000	360	2000	20000
11	20000	400	2000	22000
12	22000	440	2000	24000
13	24000	480	2000	26000
14	26000	520	2000	28000
15	28000	560	2000	30000
16	30000	600	2000	32000
17	32000	640	2000	34000
18	34000	680	2000	36000
19	36000	720	2000	38000
20	38000	760	2000	40000
		7600

Accumulated Value of deposits

= Interest Portion + Deposits made

= $7,600 + $40,000

= $47,600